Legislature 2001: Legislators plot to push fiscal plan

Backers may withhold votes to force leaders to consider alcohol tax

Posted: Wednesday, April 11, 2001

By BILL McALLISTERTHE JUNEAU EMPIRE

Legislators pushing for a long-range fiscal plan might pressure House and Senate leaders into accepting pieces of the package by threatening to withhold their votes for tapping a budget-balancing state savings account.

That strategy was recommended this morning by House Minority Leader Ethan Berkowitz, an Anchorage Democrat.

Berkowitz told Republican colleagues on the bipartisan Fiscal Policy Caucus that they could use their budget-balancing leverage to force majority leadership to allow floor votes on revenue-raising measures, notably an increase in the alcohol excise tax. The caucus was formed recently in response to inaction on a long-range plan.

A three-quarters vote is needed to tap the Constitutional Budget Reserve, a fund of about $3 billion that has been plugging on-going gaps in the state general fund. That vote typically has been the only point at which the Democratic minority exerts some control over the legislative process. It will take at least two minority votes in the House and one minority vote in the Senate this year to approve a drawdown in the reserve for the next fiscal year. About $622 million will be needed to balance that budget, Deputy Revenue Commissioner Larry Persily said today.

"We're not the only ones who have CBR votes," Berkowitz said. "If it's going to land all on the Democrats ... that's too much of a burden."

Democrats already have issues they want to champion with their CBR leverage, so it will take Republicans using the same tactic to get the alcohol tax increase, he said.

Rep. Lisa Murkowski, an Anchorage Republican, noted that she didn't introduce the bill for a "dime a drink" increase in the alcohol tax as part of the long-range fiscal plan. Rather, the idea was to better compensate the state for services related to alcohol abuse, she said.

But Murkowski said a common reaction to the bill is that the state shouldn't single out an industry but should adopt a long-range fiscal plan that affects everyone. So linking the tax increase to that plan might make it an easier sell, she said.

Rep. Sharon Cissna, an Anchorage Democrat, said it's important to get some parts of the long-range plan passed this year, although Austerman said it's way too late in the session to try to pass the whole package. Lawmakers are scheduled to adjourn May 8.

"We're going to get everything we possibly can," said Rep. Bill Hudson, a Juneau Republican who is co-chairman of the Fiscal Policy Caucus. Hudson said the group, which has about 15 to 20 active members, intends to apply some pressure on leadership.

Then the caucus will take "a full proposed plan" around the state this summer, gathering comment, to prepare for the next time legislators convene.

But there are critics.

Sen. Dave Donley, an Anchorage Republican who is co-chairman of the Senate Finance Committee, has come out with nine proposals that he said would reduce state expenditures before any new revenue sources are considered. Donley said Tuesday that the appearance of movement toward new major taxes is "an illusion," although he didn't rule out the alcohol tax increase.

"You can't impose taxes on people when they don't want them," he said. When voters see evidence of a "smaller and smarter" government, as well as caps on state spending, then they'll consider taxes, he said.

Donley's package includes a constitutional amendment to limit appropriations, subject to a formula and a procedure for a supermajority vote. Hudson and Austerman said it might be a good idea.

Persily of the Revenue Department emphasized during a budget forecast this morning that the state's fiscal problem only promises to get worse.

The good news is that, in the current fiscal year, the department projects an actual general-fund surplus of about $1.5 million, only the second time that has happened since 1993.

But Alaska crude oil prices are projected to average $27.61 a barrel in the fiscal year ending June 30, down from an earlier forecast of $30.17. And continuing decreases are projected. Although offset somewhat by production increases, that means a widening budget deficit at the current rate of general fund spending.

The new projection is that the CBR will be depleted in July 2005, six months earlier than in the last budget forecast in December. At that point, with flat-line general fund spending, the state would have an estimated $1 billion deficit.